What mainstream economists won’t tell you about Chinese modernisation

By Shiran Illanperuma 
China’s modernisation has been one of the most remarkable processes of the 21st century and one that has sparked endless academic debate. Meng Jie (孟捷), a distinguished professor from the School of Marxism at Fudan University in Shanghai, has spent the better part of his career unpacking this process to better understand what has taken place.
As a Chinese Marxist economist, Meng Jie has built his theories based on his own primary research in China’s modern factories, tracing how national supply chains have been built, how markets are constructed, and how the Communist Party and the state set goals and frameworks to achieve specific economic outcomes.
In the following interview, Meng Jie shares his perspectives on some basic elements of China’s process of socialist modernisation.

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SI: State-led development models are commonly associated with excessive bureaucratisation. How does China avoid this problem?
MJ: I think this is because, firstly, China’s economic activities are premised on the market playing a decisive role in resource allocation. This means that for the government to better play its role, it must first acknowledge the market economy’s priority status.
China’s industrial policy is systemically and structurally quite complex. This is because China has both centralised leadership and an inclusive system of local government decentralisation. Therefore, both China’s central ministries and local governments have their own industrial policies. These policies may, in fact, differ from each other.
Local governments are more familiar with local contexts and possess what is referred to as ‘local knowledge’. These local governments might therefore adapt central government policies to local conditions. In turn, these adaptations might later be recognised by the central government, which is compelled to amend its policies based on ground realities.
Another aspect is that even for industrial policies implemented by the central government, there is a certain kind of competition among different departments – we call this inter-departmental competition. For example, during the development of China’s high-speed railway, both the Ministry of Railways and the Ministry of Science and Technology were involved. The competition between the two had a positive effect on the implementation of industrial policy.
SI: You have argued that China has a ‘constructive market’. How is this different from neoliberal free markets?
MJ: While the market plays a decisive role in resource allocation in China, the government also plays a role as a facilitator. In a constructive market, the government basically plays the following roles:
First, it must coordinate the division of labour. We can see examples of this in many industries. In a purely market economy, the market price mechanism is the sole means of coordinating the division of labour. However, in China’s socialist market economy, the government also undertakes the responsibility of directly coordinating the division of labour.
Second, the government usually needs to establish an incentive mechanism in the market. This is because it needs to align the national development strategy with the micro-level objectives pursued by enterprises. Therefore, providing such appropriate incentives is actually crucial for promoting the development and growth of the market.
SI: What’s so ‘socialist’ about China’s modernisation?
MJ: China’s modernisation is led by the Communist Party of China and premised on the basic socialist economic system. Chinese-style modernisation has these several key features:
First, it is the modernisation of a huge population. Second, it is the modernisation of common prosperity for all. Third, it is the modernisation of both material and cultural-ethical advancement. Fourth, it is the modernisation of harmony between humanity and nature. Fifth, it is the modernisation of peaceful development.
The combination of these features means that Chinese-style modernisation has to be inherently socialist in nature.
First, consider the challenge of modernising China’s huge population. Former US President Barack Obama once said that the planet would not be able to sustain China’s modernisation because its population is so large. In his view, China achieving modernisation would trigger and intensify various conflicts. The implication is that there aren’t enough resources to sustain China’s modernisation. It implies that China’s modernisation would crowd out other countries’ resources and undermine the prospects of peaceful development.
Second, consider the challenge of modernising while maintaining harmonious coexistence between humanity and nature. This means that China must achieve green development, develop new quality productive forces, and develop green productive forces to realise its modernisation. Only such a development model can solve the challenges of peacefully and sustainably modernising a huge population.
I believe that only within a socialist framework and under the leadership of the Communist Party of China can China’s modernisation be achieved. In the last decade, the Chinese government has made great achievements in promoting green development. In comparison, the US government is constrained by the vested interests of capital in the energy sector. As a result, when it comes to tackling issues like climate change and global warming, the US government has shown significant regression. This is not accidental. In fact, it is caused by the capitalist system.
China’s systemic advantages enable it to pursue a path of green development. This drives Chinese-style modernisation forward through the development of new quality productive forces and the achievement of high-quality growth.

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Meng Jie’s essay Industrial Policy with Chinese Characteristics: The Political Economy of China’s Intermediary Institutions (co-written with Zhang Zibin) was published in the latest issue of Wenhua Zongheng: A Journal of Contemporary Chinese Thought.
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This article was produced by Globetrotter. Shiran Illanperuma is a Sri Lankan journalist and political economist. He is a researcher at Tricontinental: Institute for Social Research and a co-editor of Wenhua Zongheng: A Journal of Contemporary Chinese Thought